Dec 26, 2018

Almost a decade ago millions of people began experiencing severe financial hardship including bankruptcy, foreclosures, defaults and short sales due to the “Great Recession”. Today, potential homebuyers who endured such experiences and who want to re-enter the housing market are still asking the common question, “How long do I have to wait after a foreclosure, bankruptcy or short sale to obtain a mortgage?”.  

Borrowers who have experienced a foreclosure, bankruptcy or short sale are usually required to wait a certain period of time before applying for a mortgage, even though loan programs exist that offer shorter or even no waiting periods after such events. Those higher-risk loans require much higher down payments and rates to help offset the risk that lenders take when offering funds to buyers with recent severe derogatory credit events.

The following table shows the standard required waiting periods after such credit events for the most commonly used loan programs in the mortgage industry:

 

Conventional

VA

FHA

       

Foreclosure

7 years

2 years

3 years

       

Bankruptcy (Chapter7)

4 years

2 years

2 years

       

Bankruptcy (Chapter13)

2 years

1 year

1 year

       

Short sale

4 years

2 years

3 years

       

Cured default

2 years

1 year

1 year

       


Of course, there are very rare exceptions to these rules that can be made so it is always wise to seek the advice of a knowledgeable and licensed mortgage loan officer before finalizing any credit decision on your own.